Transfer private pension in to LGPS - no brainer?

Candice-Marie

I'm hoping someone can help with a sanity check relating to transferring my pension into the LGPS.

I joined the LGPS in January this year when I started a new job. I have until the end of the year to transfer from my old Aviva scheme if I want to.

I've been quoted a transfer value of £250,000 (round numbers) and LGPS have estimated benefits of additional earned annual pension of £20,500, and additional spouse's annual pension £6,000.

I haven't made payments to my private pension since Jan 2018. Looking at annuity rates, but sadly being unable to predict the future:cool:, I think it's not wildly optimistic to think I might get £15,000 a year, but who knows?

For the sake of comparison, I'm ignoring the effects of taking a lump sum, but it seems to me to be fairly obvious that transferring to the LGPS is the thing to do, as it provides a degree of certainty (important to me - I am broadly risk-averse), whereas my paid up pension pot could plummet (or soar!) but that is largely beyond my control.

I'm 49 now, each year of employment is worth about £1,100 pension, I'd like to stay in this job until I retire. I'm in good health, non-smoker, I don't have any gaps in NICs so should get full state pension in 2036. My husband has a SIPP which looks like it will provide a decent income.

What am I missing? What else should I consider? Is this decision as obvious as it seems?

Thank you in advance for any wisdom you can share

dunstonh

Are you planning to retire at LGPS scheme age or earlier?

Candice-Marie

To be perfectly honest, there is no plan. I should give that more careful thought! If I retired at 60 that would be the same time as my husband and we will be mortgage-free by then. But 10 years time from now is nothing and I can't imagine not working, so perhaps 65 is more likely - a couple of years early.

MallyGirl

That might be ar argument for keeping them separate- use the normal pension to stem the gap to avoid a reduction for taking LGPS early

snowqueen555

I have recently transferred in a small pot into the LGPS.

I agree with the above, an argument can be made to keep it separate. The LGPS is very generous if you live long enough to reap it's benefits. If you don't live long enough you don't realise the full value of the pension, which is why transferring in 250k is a really big decision compared to a much smaller pot which is what I had.

The pot has the advantage of being more flexible, If you invest that for another 10 years it would grow quit a fair bit.

Having the LGPS with 10 years service, a state pension, and your pot sounds like a great situation to be in.

I'm wondering if you are able to transfer a portion of it?

AnotherJoe

Candice-Marie wrote: »

What am I missing? What else should I consider? Is this decision as obvious as it seems?

I dont think its obvious at all and I think you are missing that theres a large reduction if you retire early and that your separate pension gives you (as said by others) the ability to retire earlier, live off that for a while burning it down faster than you otherwise might and then take the full LGPS without any reduction.
I know you wrote that you cant see yourself retiring at 60 and 65 seems more likely but isn't the LGPS retirement age going to be 67 or 68? And if health or other issues arise, or even say stress at work, you may wish or need to retire earlier. Or perhaps you might wish to go part time and top up your income from the Aviva pension.
So, I think in summary what you are missing is flexibility and options.